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Oil firm Dana Petroleum has been cleared by Egyptian officials to set up a new joint venture in the country.

The Egyptian Ministry of Petroleum has approved Petro Kareem, a venture between Dana and the Egyptian General Petroleum Corporation.

Petro Kareem will produce oil and gas from a lease within the North Zeit Bay concession, located onshore in the Gulf of Suez.

Two wells there are already producing oil via the Lorcan processing facility.

Aberdeen-based Dana said there was potential to add a further four wells, pending development lease approval.

The oil firm has estimated reserves of at least 10-12 million barrels of oil in the lease area.

During early testing of the Lorcan lease, production of more than 0.25 million barrels of oil has already been achieved.

Discoveries

Dana Petroleum Egypt has reported several significant exploration successes at North Zeit Bay during 2011, including encountering good quality oil-bearing sands and establishing two gas condensate field discoveries.

Elsewhere, two oil discoveries were made in the onshore East Beni Suef concession, in which Dana has a 50% stake.

Dana's managing director in Egypt, Nick Dancer, said: "2011 has been a very exciting year for Dana Egypt.

"Such positive results from various exploration activities have been strengthened by the recent Petro Kareem joint venture approval.

"Lorcan's onshore location makes it an extremely attractive production opportunity and we have plans for up to seven exploration/appraisal wells in the concession area for 2012."